The End of “Pure-Play” SD-WAN. Market Consolidation Begins.

Cisco has announced its intent to acquire Viptela, Inc. for $610 million. Viptela was one of the earliest entrants in the SD-WAN space. But despite early traction with a few marque brands, they saw their business decelerate in recent months.

Almost certainly, we will look back at this announcement and recognize it as the moment when the relevance or notion of “pure-play” SD-WAN officially came to an end. And we believe it will also be recognized as the point at which a broader vision for the future of networking emerged, representing a second wave of innovation and disruption that has already made itself felt in the market.

At Riverbed, we think this new vision for the future of distributed networks is anchored in three simple but powerful tenets:

Policy & orchestration – where the madness of “configuring boxes” with arcane commands and scripts finally comes to an end. Centralized policy-based management and orchestration takes its place along with a modern set of network management primitives which align to the natural language of business: Application, User, Location, Performance & Security.

A distributed fabric that connects it all – Users, Branches, Data Centers and The Cloud—is managed and orchestrated together as one network with cloud-grade agility, simplicity & power.

A unified management approach that guarantees the performance & security of business applications through the seamless integration of visibility, optimization and network security.

If you believe, as we do, that the market demands something bigger than a “pure-play” approach to SD-WAN, then it should come as no surprise that Viptela peaked early and sought an acquirer before it could really break out. For anyone who’s been tracking Cisco’s own SD-WAN saga, it’s also no surprise that Cisco is pursuing yet another option to retool its offering. Cisco’s ISR, re-spun as “iWAN”, it’s low-end Wi-Fi solution Meraki repackaged as SD-WAN, an investment in Velocloud, and now Viptela – it’s a perfect example of what inevitably happens when an incumbent takes its eye off the ball, fails to address the evolving needs of its customer base in the face of a disruptive new technology and ends up trying buy its way into a new market, like SD-WAN.

For those of us with longer memories, this deal brings to mind another acquisition in 2004, when Cisco bought start up called Actona for $82M (Start-ups were cheaper in those days!)

Cisco relaunched Actona as a product called WAAS, into to the then nascent WAN optimization market. This was around the same time another start-up called Riverbed released its first SteelHead product. Fast forward to the present day, Riverbed is now a $1B+ company that has lead the WAN optimization market for years, while WAAS is a footnote in networking history, essentially offered for free in the ISR router.

It feels like we might be about to see this movie for a second time with the Viptela transaction. Cisco will in all likelihood try to fold Viptela into its ISR product and try once again to tap into a new market that it has struggled to respond to with an organic strategy. History will tell if Viptela experiences the same fate as Actona, disappearing forever into the ISR black hole.

At Riverbed, we continue to work diligently to make a new vision for networking a reality, and we challenge other vendors, Cisco or otherwise, to think big, think bold and “Think fast!” in their approach so we can truly bring networking out of the 1990s and into the cloud era. Businesses across all verticals are experiencing the need to digitally transform. But in order to be successful, they need a new approach to networking …not just another router refresh.